Ideally, of course, Congress would have never passed the Medicare prescription drug benefit to begin with, and thus never handed out the initial subsidy. That way this whole kerfuffle could have been avoided entirely. And the broader point I’d draw from all of this isn’t so much that the Affordable Care Act is going to cost big corporations billions””though it certainly is””but that the health care sector is so thoroughly dominated by government regulations and subsidies that exercise far, far too much influence over how decisions about health care and its associated costs get made. So rather than argue over the tax treatment of drug subsidies, we ought to be pushing to get rid of the subsidies entirely.
This subsidy, Congress decided, would not be taxed.
Under the Affordable Care Act, however, Congress reversed that decision. The subsidy is now taxable.
When I see stuff like this, it makes me think twice about my Roth IRA, which is supposed to come back to me tax free years from now, since I already paid taxes on it. I strongly suspect that by then it will be taxed.
Sidney,
I think it more likely that you will see Obama’s deficit reduction committee recommend a VAT tax and “means testing” Social Security benefits. The riff will go something like this – “We know you contributed to Social Security, but in the name of social justice, there are others less well off than you that really need the money more than you do since you invested wisely and saved, so we are going to give your part (yes, your part, you actually have an account balance with Social Security) to those who need it.”
I think we I am going to start referring to “social justice” as “government mandated grace.” It’s more descriptive.
I was talking to someone the other day who was describing how her father and his friends had been obsessing in endless gripe sessions about the Democrats, their President, and the legislation that was recently passed to take money from honest folks and use it to support the indolent. My mother said that her father never did reconcile himself to the Social Security Act.